The Future of Rail

Opportunities for energy and the environment

IEA 2019. All rights reserved.

IEA 2019. All rights reserved.

Trends in the Base Scenario

In the Base Scenario,21 total passenger transport activity increases by about 210% through 2050, reaching around 19 trillion passenger-kilometres (from 6.2 trillion in 2017). This growth is mainly satisfied by cars; as in other rapidly growing countries, rising incomes and demand for individual motorisation mean that passenger car ownership grows fast in India, to just above 200 cars per 1 000 inhabitants by 2050. Rail passenger transport reaches about 3.7 trillion passenger-kilometres in 2050 (a 200% increase over 2017), broadly maintaining today’s level of rail share in passenger transport (Figure 4.8).

Figure 4.8 Passenger and freight transport activity by mode in India in the Base Scenario, 2017-50

Note: Passenger rail activity includes conventional rail, metro and high-speed rail.

Source: IEA (2018a).

Key message • In the Base Scenario, passenger transport activity exceeds 19 trillion passenger-kilometres and freight transport activity attains 12 trillion tonne-kilometres in 2050. Rail passenger activity increases by 200% and freight by 160% in the period to 2050.

21 See Chapter 2 for details of the Base Scenario.

IEA 2019. All rights reserved.

India’s freight activity across all modes expands even more than passenger transport in the Base Scenario. Between 2017 and 2050, total tonne-kilometres increase almost fourfold, reaching about 12 trillion tonne-kilometres by 2050 (excluding shipping). Freight rail activity increases by around 160%, a lower rate than other modes, such as heavy trucks, in particular. Rail retains its predominant role as a carrier of bulk materials. But strong growth of non-bulk materials, usually

carried by road freight trucks, means that the overall share of rail freight in delivery of goods Page | 147 and materials is under pressure from other modes. Overall, both passenger and freight rail

activity in India grows much more quickly than in other countries.

Passenger rail

Passenger rail in India is under competitive pressure from other modes of transport, road transport in particular, but also aviation. In the Base Scenario, the existing policy emphasis on improving the road network alleviates some of the most pressing problems of quality and congestion, improving the attractiveness of road transport and rapidly pushing up car ownership. Similarly, air travel is boosted and passenger-kilometres travelled by air increase eightfold over today’s level, to about 1.5 trillion passenger-kilometre by 2050. While the other transport modes grow faster than rail, the growth of passenger rail in the Base Scenario is nonetheless impressive (Figure 4.9), building on several key projects currently underway.

For urban rail, the completion of metro projects currently under construction adds 620 kilometres and planned projects add 600 kilometres by 2030 to the current network of about 500 kilometres of urban rail (Map 4.2). In addition, the Metro Rail Policy approved in 2017 promotes the further deployment of metro systems in other large and densely inhabited cities, achieving a total aggregated track length of 3 600 kilometres by 2050. This boosts urban rail transport and increases related passenger-kilometres by a factor of seven to 2050, from about 8 billion passenger-kilometres in 2017 to about 55 billion by 2050. Despite this dramatic increase, in 2050 urban rail in India provides only a minor share (about 1%) of total urban transport activity in the Base Scenario.

Figure 4.9 Transport activity by railway mode in the Base Scenario, 2017-50

Note: The high-speed rail corridor between Mumbai and Ahmedabad comes into operation in 2023 in the Base Scenario. Source: IEA (2018a).

Key message • Activity on all railway modes grows strongly.

Conventional rail between cities also expands significantly, to about 3.7 trillion passenger-kilometres in 2050, an increase of about 190% over today’s level. This growth is attributable to the completion of the Western and Eastern DFCs, the deployment of advanced signalling systems and incremental capacity expansion in general. Together, these measures relieve the congestion on the existing network, facilitating the increase of traffic volumes of intercity trains on the more heavily utilised routes, at higher speeds and with improved timekeeping.

The Future of Rail

Opportunities for energy and the environment

IEA 2019. All rights reserved.

IEA 2019. All rights reserved.

High-speed rail services are also available to passengers in India in the Base Scenario. Currently, the MAHSR (Mumbai-Ahmedabad high-speed rail) corridor is under construction and another nine high-speed rail corridors along the Golden Quadrilateral and its two diagonals are being evaluated (Map 4.3). Six high-speed rail corridors are undergoing feasibility studies and feasibility studies are planned for three additional high-speed rail corridors (Mishra, 2018).22 In the Base Scenario, it is assumed that, alone among high-speed rail projects, the MAHSR corridor

22 While accounting for only 16% of the network, passenger traffic along the Golden Quadrilateral and its diagonals accounts for about 50% the national total (DFCCIL, 2018).

IEA 2019. All rights reserved.

is completed and becomes operational in 2023. On the other hand, the high-speed rail lines along the Golden Quadrilateral and its two diagonals, currently under evaluation, are not realised, against the backdrop of difficulty in acquiring land, struggle to gain public acceptance for high-speed rail projects and increasing competition from aviation.23 In the Base Scenario, developing the MAHSR corridor alone adds 15 billion passenger-kilometres in 2050.

Page | 149

Freight rail

Freight rail transport activity increases rapidly in the Base Scenario, up about 160% from today’s level to about 1.9 trillion tonne-kilometres in 2050. This mainly reflects the completion of the Western and Eastern DFCs, but also the wider trends in the Base Scenario, which suggest continued growth of coal demand and container transport. The growth of coal use is particularly important, as it is the most significant commodity for freight rail transport in India. Despite a strong policy emphasis on accelerating the use of renewable energies (and solar photovoltaics in particular), rising electricity demand means that coal use for power generation grows by 115% through the end of the projection period, more than doubling overall, relative to the level today (IEA, 2018c). As a result, activity associated with the transport of coal by rail increases from 250 billion tonne-kilometres in 2015 to 580 billion tonne-kilometres in 2050. This steep increase is moderated only by the reduction in the average distance over which coal is transported (as a result of the coal linkage rationalisation and of the SHAKTI policy framework) and by changes in the siting of coal-fired power plants, which are sited closer to the extraction and import areas (Kamboj and Tongia, 2018).24 The share of coal in overall freight rail activity slightly decreases, from around 40% in 2015 to 30% in 2050, as the need for carrying other commodities (iron and steel in particular, but also stone and mineral oil) increases at faster pace and as the development of the Western DFCs fosters the growth of container transport via rail. The share of freight rail in total freight activity varies across commodities. For commodities that currently rely heavily on rail (e.g. coal, iron and steel, iron ore, cement and stone), rail’s share remains constant or even rises; on the other hand, commodities which currently have a low rail share (e.g. food grains and fertilisers) increase road share. Overall, freight rail transport grows significantly in the Base Scenario, as part of overall growth of freight transport to fuel India’s rapid economic growth. Freight rail retains its share in carrying bulk materials, but struggles to enter additional markets such as those carrying non-bulk materials. The observed trends place a question mark over the feasibility of continuing the current practice of using revenues from freight rail traffic to subsidise conventional passenger rail movements. Comparing the 2017-50 increase of total freight rail activity (160%) and the rise in activity of intercity trains (200%) indicates that the existing debate about the relative level of freight and passenger fares discussed previously will intensify. Assuming that the sum of revenues from passenger and freight rail, plus the losses from passenger operations in 2015, serves as an indication of revenue needs per passenger-kilometre, the losses incurred by passenger rail operations would grow, amounting to approximately 30% of total revenues by 2050. A further increase of freight fares for coal (or other commodities) could not be counted upon to increase subsidies to passenger rail, as further rail freight tariff increases would reduce the competitiveness of freight rail transport. Moreover, further reduction of the average distance over which coal is carried to power plants (beyond the levels assumed in the Base Scenario) would further cut revenues from freight operations.

23The domestic aviation sector in India grew at a compound annual growth rate of 9.9% between 2007 and 2016 (ICAO, 2018).

24The average distance over which coal is transported in the Base Scenario is assumed to decrease by 10% in 2030 relative to the 2017 level and then to remain constant.